Mere Pasting Of Circular For Interest Rate Reduction By Bank On Its Notice Board Does Not Mean It Is Communicated To Customers: Karnataka High Court

A division bench of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj was informed by the bank that the circular dated June 30, 2010 was pasted on the notice board of the bank and as such there was due communication to the customers of the bank.

To this, the bench said,

"We are not satisfied with the stand of the bank in this regard. It was not a wide circulation of the circular of the bank and as such mere pasting of circular on notice board could not be treated to be wide circulation of the circular and as such we are not satisfied with the stand taken by the bank."

Further the court said, "We are of the considered view unless the circular was duly communicated to respondent petitioner and thereafter he had not applied for reduction in rate of interest and had availed the benefit of the said circular on the subsequent date it could be said that the benefit of said circular could not be extended from the date of issuance and only apply for the benefit of the said circular."

The bank had challenged the order dated July 29, 2021, wherein the court had allowed the petition filed by one Shekhar B S and directed the bank to give effect to the Circular dated 30.06.2010 and petitioner be given benefit of reduction in rate of interest on the housing loan from that date.

The customer had availed a housing loan from respondent No.1-bank on 14.02.2007 at a prime lending rate of 11.75% p.a. The bank reduced the rate of interest to 8.25% with effect from 01.07.2010. Petitioner filed an application with the bank on 24.01.2017. The interest has been reduced by the bank with effect from 24.01.2017. His complaint to the banks ombudsman was rejected following which he approached the court.

The bank had contended that, "Petitioner had an option to switch over to the new system and if he had made an application at an earlier point of time, the bank would have considered the same. Since the petitioner submitted his application on 24.01.2017, the bank has given the benefit and reduced the rate of interest from that date." On appeal, the bank raised similar contention.

The court on going through the records in the appeal held, "We do not find any infirmities or illegality in the stand taken by the learned single judge. The writ appeal is accordingly dismissed."

Case Title: Canara Bank (E-Syndicate Bank) v.  Shekar B S

Case No: WA 12/2022

Citation: 2022 LiveLaw (Kar) 30

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